In 1923-24 the arrears outstanding were reduced by Rs.146 lakhs.

The revised estimate for 1924-25 falls short of the Budget estimate for that year by Rs.174 lakhs, due to decreases in Super Tax Rs.73 lakhs, and Income Tax Rs.75 lakhs, and increases in refunds and shares payable to Provincial Governments of Rs. 20 lakhs and 6 lakhs, respectively.

The Budget estimate for 1925-26 has been put at Rs.87 lakhs higher than the Revised Estimates for 1924-25 in consideration of the fact that the year 1924-25 on the income in which the assessments for 1925-26 are based, has been on the whole a more prosperous year for trade than the previous one.

The revised estimate for 1924-25 falls short of the Budget figures for that year by Rs.131 lakhs, owing to the fact that the reduction of the duty from Rs.2-8-0 to Rs.1-4-0 per maund as from 1st March, 1924, had a much more rapid effect than was anticipated. The collections in March, 1924, alone amounted to Rs.2,56 lakhs. Thus part of the increased revenue expected in 1924-25 accrued in the previous financal year.

For 1925-26 the rate of duty remains unaltered and no disturbing factors can be foreseen.

Opium is supplied at fixed prices to certain other Governments, principally Malaya, the Netherlands Indies, and Siam; the balance for export is sold by auction at Calcutta. In no case, however, are exports permitted without an import certificate by the Government of the country of import as prescribed by the League of Nations.

Excise opium is supplied to Provincial Governments from the opium factory at Ghazipur according to their indents. In accordance with a new accounts procedure introduced with effect from the 1st April, 1925, the Provincial Governments will pay for the opium when it is supplied to them and will also take over on payment all stocks in treasuries on that date. This change of procedure has resulted in the Excise opium revenue for 1925-26 being abnormally increased by about Rs. 20 lakhs.

(a) The annual provision for the repayment of capital through the railway annuities and sinking funds, amounting to £1,600,000 approximately, has been excluded from the Railway Revenue Account with effect. from the Budget of 1924-25.

(b) See Appendix IIIa and remarks below.

In accordance with the resolution passed by the Legislative Assembly in September, 1924, (see Appendix IIIa) railway finance has been separated from the general finances of the Government of India with effect from 1924-25. The Railways have to meet all

working expenses, including interest charges of commercial lines, and after meeting these charges they have to make a contribution to general revenues equal to 1 per cent. on the capital at charge of the commercial lines in the penultimate year plus one-fifth of surplus profits in such penultimate year and one-third of the amount remaining available for transfer to Railway reserves in excess of Rs.3 crores. It has, however, been specially arranged that the calculation of the contribution both in 1924-25 and 1925-26, of 1 per cent. on the capital at charge and one-fifth of surplus profits, shall be based on the actuals for 1923-24.

The net payments due from the Railways to general revenues of the Central Government in 1924-25 and 1925-26, calculated in the manner explained above, are as follows:

It will be seen from the foregoing tables and the Net Revenue table on page 6 that the net revenue of the Central Government from the Railways is as follows, viz:

1923-24 Accounts, Rs.6,44,20,935; 1924-25 Budget, Rs.4,58,14,000; 1924-25 Revised Estimate, Rs.5,64,35,000; and for 1925-26 Budget, Rs.5,23,86,000.

The gains from Commercial lines in the same years are: 1923-24 Accounts, Rs.9,90 41,000; 1924-25 Revised Estimate, Rs.11,24,58,000; and 1925-26 Budget, Rs.10,05,57,000.

The new Railway Depreciation and Railway Reserve Funds are estimated to have closing balances on 31st March, 1926, of Rs.3334 lakhs and Rs. 7383 lakhs, respectively.

The East Indian Railway came under State management on the 31st December, 1924, and the Great Indian Peninsula Railway on the 30th June, 1925.

Indian Postal and Telegraph Department.-The revised estimate of gross receipts in 1924-25 is Rs.8 lakhs less than the original Budget figures. This decrease is, however, only apparent, as against Rs.19 lakhs provided in the Budget for payment to the Provincial Governments as their share of the revenue from unified stamps, 42 lakhs has been so included in the Revised figures, owing to it having been decided to give them additional assignments based on the growth in revenue from General Stamps since 1906, roughly estimated to amount to about Rs.23 lakhs. Excluding this increase in the assignment, the gross receipts are about Rs.15 lakhs better, due partly to trade recovery and partly to the enhancement of charges for certain services.

The increases under Working Expenses of the Postal and Telegraph Department are partly due to pensionary charges estimated on a liability basis and a specific provision for a depreciation fund.

Hitherto the accounts of the Indian Postal and Telegraphs Department have been kept mainly on a cash basis, no credit being taken in its Budget for the value of its services as the agent of Government in carrying out various essential services not directly connected with its primary activities, e.g., Savings Bank, Cash Certificates, Life Insurance, etc. With effect from 1st April, 1925, the accounts have been placed upon a commercial basis, and in the Budget for 1925-26 Rs.244 lakhs has been credited to the Department in respect of the above services, while provision has also been made for depreciation of assets, interest on capital, pension liability, and similar charges which should legitimately be borne by any commercial concern.

The greater part of the net revenue receipts shown under Currency arises from the interest on the securities in the Paper Currency Reserve, and in respect of loans to the Imperial Bank against inland bills of exchange. Under the Indian Paper Currency Act this interest was earmarked for reduction of created securities in the Paper Currency Reserve. This provision has, however, been temporarily suspended since 1921-22 by legislation and the interest credited to revenue.

Provincial Contributions and Adjustments.

Contributions.-It was provided by the Devolution Rules, made under Section 45A of the Government of India Act, that in the year 1921-22 contributions of specified amount, and in future years similar contributions or such such smaller sums as might be determined by the Governor-General inCouncil, should be paid by the Local Governments to the Government of India. If for any year the total of the contributions were reduced, reductions should be made in respect of those Local Governments only whose last previous annual contribution should have exceeded the proportion specified below of the smaller sum so determined as the total contribution; and any reduction so made should be proportionate to such excess.

The Government of India have, with the concurrence of the Legislature, made the following remissions of contributions with effect from 1st April, 1925; those of a non-recurring character, being shewn in column 3 of the table.

For temporary remission of Bengal contribution (Rs. 63 lakhs), see footnote on page 3.

In addition to the above Coorg contributes Rs.12,000 annually towards the pay of the Chief Commissioner and his establishment.